Meanwhile, our oil production has declined drastically, now at 66,000 barrels per day, the lowest in 60 years! And that's not the end of the story. A 2011 audit estimated our oil reserves at approximately 509 million barrels, consisting of 243 million barrels proven, 110 million probable, and 156 million possible, which could be even lower, since risk has not been factored. On the other hand, Rystad Energy has now estimated global reserves at 2.1 trillion barrels, the United States at 264 billion barrels, now with more reserves than Russia at 256 billion and Saudi Arabia 212 billion, other countries with huge reserves being Canada, Iraq, Venezuela and Kuwait. And we must now add Argentina, with the fourth-largest recoverable shale oil resources in the world, 27 billion barrels, expecting to double production from its massive Vaca Muerta fields by 2018. Our reserves are therefore paltry by comparison and with our production down and prices low, it is extremely irresponsible to think of continuing to finance Trinidad and Tobago with proceeds from oil.
And also from gas, where the American shale revolution is turning things topsy-turvy. Having entered the LNG market last January, the US is now selling gas to the Middle East, recently to Dubai and Kuwait, having already shipped to Argentina, Chile, Brazil, India and Portugal. And, just last Tuesday, America sent its first shipment to Britain, opening a “virtual pipeline” across the Atlantic, with the UK and Europe having access to cheap and abundant US shale gas. “We're in a time of huge change in LNG shipping routes,” says Ted Michael of Genscape, a market data provider. “The old order is being overturned, and we haven't seen the dust settle yet”; and Frank Harris, of Wood Mackenzie consultancy says “there is an awful lot of LNG sloshing around the world at the moment, with even more to come, putting downward pressure on prices,” Credit Siusse forecasting depressed prices for the foreseeable future.
So why are we relying on gas? More LNG keeps coming with new projects in Australia and the US, both countries heading to surpass Qatar as the world's largest exporter, “a new train coming on stream every nine weeks,” according to BP chief economist, Spencer Dale. And, as I have pointed out before, with improved technology cutting costs by 40 per cent, LNG production will continue escalating, the US and Canada each having between 100 and 200 years of shale reserves, British Petroleum, in its 2016 Energy Outlook, forecasting US shale growth at four per cent annually from now to 2035, to account for some 20 per cent of global output; BP also predicting China, with the world's largest deposits, will become a major shale oil and gas producer over the next 20 years. Other countries are also now exploring shale, including Poland, Algeria, Colombia, Russia and Mexico, and others from the 41 countries with impressive reserves. Spencer Dale says the “shale revolution is here to stay and by 2035, will be responsible for half the gas supply worldwide”.
For those who fear the worst for the prospects for gas in Europe, Dusseldorf was not a reassuring place to be these last few days. That’s because the highlights of the tenth annual European Gas Summit organised by Platts (part of S&P Global) in the German city persistently returned to the themes that demand forecasts are always too high, that the industry is behind the curve in responding to public concerns about carbon emissions; and that the much-trumpeted prospective sources of supply, notably LNG from the US and eastern Mediterranean, may simply find no room in the European market.
This approach was kicked off by the veteran gas trader Wolfgang Peters, who blamed the European Union as much as Russia for damaging the reputation of gas as a speedy and cost-effective way of tackling CO2 emissions. “The European Commission will not acknowledge there has been reputational damage to natural gas,” said Peters, who formerly headed RWE’s supply and trading operation in the Czech Republic. “Gas advocacy should be more assertive," Peters said. “Even without a subsidy, it can make a huge contribution to the reduction of greenhouse gas emissions.”
Peters – who at RWE championed the original Southern Gas Corridor project, the Nabucco pipeline, to bring gas from the Caspian to Europe – said the new SGC, operated by Socar, BP and others, would struggle to secure much further input in the near future to enable it to operate at anything like its planned eventual capacity of 31-32bn m³/yr to Turkey and 20bn m³/yr to Italy.
“The elephant has given birth to a mouse,” he said of the $40bn SGC project, which in its first phase is to carry 6bn m³ to Turkey and another 10bn m³/yr towards Italy. Likewise, Cypriot analyst and NGW contributing editor Charles Ellinas doubted that gas from the eastern Mediterranean would reach Europe soon, and wondered whether this was truly appreciated by political leaders in Israel and, especially Cyprus, who hope that their countries will eventually reap rich rewards from gas exports. “The message that the EU is oversupplied and is not interested in eastern Mediterranean gas is not getting there,” said Ellinas.
In the supply context, however, the most striking remarks came from Trevor Sikorski of Energy Aspects. US LNG, he said, may stay in the US. Although US companies have the capacity to export, the actual gas may wind up serving as an option for export, rather than as a mainstay of global trade. The rest of the world may not need it, he argued, and if the Russians and Norwegians keep prices low in Europe, there may be relatively little US LNG coming to Europe. Subsequently conference chairman Stuart Elliot, summing up the first day’s discussions, noted that Russia and Norway were on track to achieve record exports in 2016, “which suggests there may be something like a price war.”